Cineworld Group – Interim Results 202112 August 2021 0
Overview
Operational Update:
All sites across the Group opened since June
Gradual recovery of admissions and demand since re-opening supported by strong F&B spend
Anticipate strong trading in Q4 supported by an exciting film slate subject to COVID-19 situation
Key management actions taken during the period:
Commercial initiatives: studio and landlord agreements
Operational measures: cash preservation and permanent cost reduction
Financing initiatives: secured additional financing and covenant waivers
Business now well positioned to benefit from recovery
1
Financial Review
H1 2021 FINANCIALS AT A GLANCE
Note: % Indicate performance vs H1 20201) Adj. EBITDAaL refer to Adj. EBITDA net of Payment of lease liabilities2) Net debt excludes lease liability and c.$260m dissenting shareholder liability
Admissions
14m
Revenue
$293m
Adj. EBITDA
IFRS 16
($21m)
3
Adj. PBT
($659m)
Monthly Cash Burn
(~$45m)
H1 net Cash Burn
after tax receipt
($67m)
Net Debt2
Pre-IFRS 16
$4.6bn
Adj. EBITDAaL1
($103m)
Cash burn of ~$45m per month during H1 21 vs. $60m previously indicated
Streamlined operations and closed an additional 12 underperforming sites
Achieved material permanent cost reductions while retaining operational capability
Key Liquidity Actions
4
Secured rent relief and deferral with majority of our landlords
Curtailed non-essential spending (operating expenses and capex)
Received $203m of US CARES act tax refund
Secured >$400m additional liquidity (convertible bond and term loan)
Adj. Profit and Loss – IFRS 16$m H1 2021 H1 2020
Revenue 292.8 712.4
Cost of sales (283.2) (624.9)
Gross profit / (loss) 9.6 87.5
G&A (30.7) (52.0)
Cash generated from JV - 17.5
Adjusted EBITDA (21.1) 53.0
D&A1 (256.4) (349.8)
Adj. Operating (Loss) / Profit (277.5) (296.8)
Net finance costs2 (381.0) (270.9)
Adj. (Loss) / Profit before tax (658.5) (567.7)
Tax charge 76.7 131.7
Adj. (Loss) /Profit after tax (581.8) (436.0)
Adjusted diluted EPS (cents) (42.4c) (31.8c)
Note: Please refer to note 2. Alternative Performance Measures1) Excludes amortisation of intangibles created on acquisition of $12.0m2) Excludes Movement on financial derivatives, Recycle of net investment hedge, Foreign exchange translation gains and losses, Gain on extinguishment of debt, remeasurement loss on financial instrument and Remeasurement of financial asset amortised cost 5
Net finance costs are:
- Net interest expense on bank loans of $125.1m (H1 2020: $67.9m)
- Lease interest of $219.0m (H1 2020: $164.2m)
- Other of $36.9m (H1 2020: $38.8m)
Includes: cash contribution from JVs – no amounts received in H1 2021
Excludes:
- Transaction costs $20.2m
- COVID-19 related costs of $4.4m
- Refinancing costs of $5.7m
COVID-19 materially impacted our half year results starting March 2020
Recognised $96m impairment reversal charge
Strong Cash Flow Management
6
($116m)
($46m) ($161m)
($110m) ($271m) $204m
($67m)
Operating CashFlow after rent Net Capex
CF from operationsnet of Capex
Interestpayment
Free Cashoutflow Tax received Net Cash Burn
Monthly cash burn of ~$45m vs. $60m previously indicated
Supported by WC inflow in June
Net cash burn post receipt of tax receipt of $67m during H1 21
1) Cash (used) / generated from operations adjusted for distributions received from equity accounted investees and Payment of lease liabilities
1
June 2021 Net Debt
7
$4,552m$4,633m
$161m
$110m
($204m)
$3m $11m
Net DebtDec 2020
Cash flowfrom
operations
Interest Tax Others &issuing fees
Non-cashmovements
Net DebtJun 2021
Net debt increase by $81m in H1 2021
Note: Face value of debt liability as per note 10 of interim statement net of cash on balance sheet Excludes lease liability and c.$260m dissenting shareholder liability
Liquidity
$413m raised 2021:
– + $213m convertible bond (April 2021)
– + $200m new term loan (July 2021) – excluded from June 2021 Net debt calculation as post balance sheet date
– Cash of $452.5m at June 2021 (exc. Proceeds from $200m term loan)
Cash burn:
– Monthly cash burn including interest of ~$45m per month vs. $60m indicated at FY20
Covenants
– Compliance and over performance vs. priming facility covenants
– Waiver until June 2022 testing (5.0x thereafter)
– Company subject to minimum liquidity covenant of $100m
Cost savings initiatives and operational actions
8
Digitalisation & systems – click and collect on concessions and contactless orders through kiosk
Optimised Cinema payroll vs pre-pandemic level
Utilities and maintenance savings - roll-out of ~1,800 laser projectors and refurbishments
Delay majority of new refurbishment projects in the near term
Margin upside from cinema closure operating cost cutting measures over the longer-term
G&A - reduction of corporate headcount and others
Rent reduction achieved
Financial Outlook
Continue tight cost control and monitoring post cinema re-opening
Streamlined operations: material savings anticipated post COVID-19
Continue cash preservation initiatives
Reduced monthly cash burn since June re-opening
Total capital expenditure for H2 2021 expected to be approximately ~$80m
Positive Cash Flow generation anticipated to be achieved in Q4 21 subject to COVID-19 situation
Targeting cash generation and deleveraging in 2022
9
Business Update
Key Operating Highlights
Estate now fully reopened since June
Majority of capacity restrictions lifted across all territories
Gradual recovery of admissions and demand since re-opening
Continued expansion of Food and Beverage offering to support future SPP growth
Anticipate strong trading in Q4 supported by an exciting film slate subject to COVID-19 situation
Continued active dialogue with studios Partners
Continued progress with landlord negotiations
Continued collaboration with premium format partners (IMAX, 4DX, ScreenX and more)
11
Current Trading
12
15%
41% 45%
0%
25%
50%
75%
100%
May2021
June2021
July2021
Admissions vs. 2019 level
Estate now fully reopened since June
Admissions steadily increasing on a weekly basis
Admission levels of 45% in July 21 vs. July 19 – best performing month in 2019 (Spider-Man: Far from Home, The Lion King and Toy Story 4)
Admission levels of 57% in July 21 vs. 2019 Monthly average
Anticipate normalised trading in Q4 supported by a strong film slate
Spend Per Person on food and concessions at record high
Continue to provide the best cinema experience
A STRATEGY FOR THE LONG TERM
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To be “The Best Place to Watch a Movie”
Continue to expand and enhance our estateGenerate attractive return on investment from refurbishments
Continue to be a innovative operators
Drive value for shareholders
Continued refurbishments in the US
14
14 refurbishments completed in the US so far, including flagship cinemas such as Union Square and Irvine Spectrum as well as Warrington Crossing and Hacienda Crossing
6 completed refurbishments in H1 2021 with a further 3 to be completed in H2 2021
Includes premium formats: IMAX, VIP, Premium Large Format, ScreenX and 4DX
Introduction of enhance food offering including bars, Lavazza coffee and B-Fresh
New refurbs and cinemas well received by customers
Continued delivery of our refurbishments program
Irvine, CA Union Square, NY Hacienda Crossing, CA Warrington Crossing, PA
Continued Roll-out Across the US and Europe
15
6 new sites in 2020 and H1 2021
5 sites and 69 screens in the US
1 site and 13 screens in ROW
United States ROW
5sites
69screens
1Site
13screens
5 new sites to be opened in H2 2021
3 sites and 39 screens in the US
2 site and 20 screens in the UK
United States UK
3sites
39screens
2Site
20screens
2021 film slate
16
2022 and beyond
17
2
18